Inflation Rate In India Likely To Remain Above 6 Per Cent Until December 2022, says RBI Guv Shaktikanta Das

Inflation in India hit an eight-year high mark in April at 7.79 per cent. It eased a little in May but still remained outside the RBI's tolerance band of 2-6 per cent.

New Delhi: The inflation rate in India is likely to stay inflated in the near term. According to the latest statement by Governor Shaktikanta Das, it is likely to remain above the RBI’s upper tolerance limit of 6 per cent by December 2022. According to a report by Reuters, Das said that India is well on track to bringing down inflation.

He was quoted as saying, “We are well on track to bring down inflation and inflation expectations. Until December, CPI is expected to remain higher than the upper tolerance level. Thereafter, it is expected to go below 6% as per our current projections.”

Inflation in India hit an eight-year high mark in April at 7.79 per cent. It eased a little in May but still remained outside the RBI’s tolerance band of 2-6 per cent. According to experts, the high prices are due to supply-side constraints, majorly on the back of the ongoing Russia-Ukraine war.

The RBI decides the monetary policy which helps in regulating the liquidity and the demand in the economy. It has been navigating through troubled waters to control inflation. Yet, Das is optimistic on the impact of the monetary policy.

He said, “Inflation expectations influence not only households but also businesses and drive up pricing of food, manufactured goods and services. If they expect inflation to be high, even companies will defer their investment plans.”

Rupee all-time low

On Wednesday, the Indian rupee hit an all-time low of 78.39 against the USD. Das said that it is majorly due to the tightening of monetary policies by advanced economies. The Fed has been hawkish on the interest rates as the US continues to reel under a 40-year high inflation rate.

He added, “In such a situation, there will be outflow of capital from emerging market economies. It is happening across emerging market economies. This is nothing but the spillover of the monetary policy actions in advanced economies.”